The "Red Flags" Clarification Act of 2010 was signed into law this past weekend.

While the law has been couched as a relief for the nation's small businesses from the burden of the Federal Trade Commission's (FTC's) regulations, many doubts linger surrounding the constituency of trade creditors, who, despite the new law, may still be required to have a "Red Flags" program in place as the statute originally dictated.

As described by the FTC, the new law "gives businesses the flexibility to tailor their written ID theft detection program to the nature of the business and the risks it faces. Businesses with a high risk for identity theft may need more robust procedures-like using other information sources to confirm the identity of new customers or incorporating fraud detection software. Groups with a low risk for identity theft may have a more streamlined program-for example, simply having a plan for how they'll respond if they find out there has been an incident of identity theft involving their business."

While this explanation sounds like a relief for businesses in general, it says nothing about exemptions from the regulations, only a new flexibility in their application.When asked how the law affects the majority of NACM's membership, Wanda Borges, Esq., of Borges & Associates, LLC, noted that "I don't think this changes a thing for our trade creditors," describing the bill as "short and almost nonsensical."

Although the new law adds a few more criteria to the definition of a creditor, it fails to explicitly and openly exempt trade or business creditors. The final portion of the bill also leaves the door open to further regulation that could apply to any business in any industry."They may have succeeded in eliminating the need for small law firms and small doctor's offices to have 'Red Flags' programs in place, but that catch-all at the end means our trade creditors aren't exempt," she added. "I think what it does is gives businesses a better opportunity to determine whether or not they're low risk or high risk. It's clear that they have not excluded trade credit."